- \n
- Net sales of $360 million<\/b><\/li>\n
- Gross margin of 36.0% and adjusted gross margin of 36.9%<\/b><\/li>\n
- Net income of $52 million and diluted earnings per share of $0.52<\/b><\/li>\n
- Adjusted net income of $56 million<\/b><\/li>\n
- Adjusted diluted earnings per share of $0.55<\/b><\/li>\n
- Adjusted EBITDA of $100 million<\/b><\/li>\n<\/ul>\n
WINCHESTER, Va.–(BUSINESS WIRE<\/a>)–
\nTrex Company, Inc. (NYSE:TREX), the world\u2019s largest manufacturer of wood-alternative composite decking and railing, and a leader in high-performance, low-maintenance outdoor living products, today announced financial results for the third quarter of 2026.<\/p>\n\n\u201cWe delivered an exceptional third quarter as we successfully executed our enhanced distribution strategy, began the ramp-up of our Arkansas manufacturing facility, generated record third quarter revenue, and again increased our full-year outlook,\u201d said Adam Zambanini, President and CEO.<\/p>\n
\n\u201cGrowth reflected strong underlying customer demand with additional benefit from distribution-related inventory investments. Our growth remains overwhelmingly volume-driven, with minimal benefit from pricing.<\/p>\n
\n\u201cWe believe our underlying performance was driven primarily by Trex-specific initiatives and continued market share gains rather than any meaningful improvement in broader end-market conditions. Demand remained strong across all levels of decking products, demonstrating the effectiveness of our wood conversion strategy and our ability to attract a broader range of homeowners into the Trex brand.<\/p>\n
\n\u201cOur investments in marketing, innovation, and brand development continue to strengthen demand for Trex products and support our long-term growth objectives. These efforts, combined with our category leadership and expanded market reach, provide a strong foundation to continue gaining market share and delivering long-term growth across a range of market environments.<\/p>\n
\n\u201cThe enhanced distribution strategy announced last quarter was executed successfully and remains on schedule. During the quarter, we completed inventory placements with our new and expanded distribution partners while inventory held by our former distribution partner continued to be reduced. Although inventory levels increased at selected distribution partners during the transition, overall channel inventory remained comparable to the prior year.<\/p>\n
\n\u201cImportantly, the transition was completed with minimal disruption across the channel and has strengthened our route-to-market capabilities. Together with our distribution partners, we believe we are now better positioned to support accelerated growth and capitalize on future market share opportunities.<\/p>\n
\n\u201cTo support our long-term growth strategy, we continue to make excellent progress ramping production at our Arkansas facility. The facility remains on track to have approximately 50% of its existing decking production capacity operational by year-end. While startup costs were higher than anticipated during the quarter largely due to certain mechanical issues that have since been resolved, we continue to expect Arkansas to drive meaningful margin expansion over time through improved manufacturing efficiency, lower logistics costs, and closer proximity to key Sunbelt growth markets.<\/p>\n
\n\u201cThe facility was also designed with future expansion in mind, allowing us to efficiently add production lines and increase capacity as demand grows. This provides Trex with substantial flexibility to support both near-term growth opportunities and our long-term objective of significantly expanding the business.<\/p>\n
\n\u201cGiven our strong year-to-date performance, continued demand momentum, and confidence in our strategic initiatives, we are pleased to raise our full-year guidance once again,\u201d Mr. Zambanini concluded.<\/p>\n
Q3 2026 Financial Summary<\/b><\/p>\n
All financial results comparisons made are against the prior-year period unless otherwise noted:<\/i><\/p>\n
\nNet sales increased 26.0% to $360 million from $285 million, reflecting broad-based volume growth led by the Trex Enhance\u00ae<\/sup> product line, supported by strong consumer demand, continued success executing our wood conversion strategy, and ongoing market share gains. We estimate that approximately $30 million in revenue came from initial distribution load-in.<\/p>\n
\nGross profit was $129 million, with gross margin of 36.0%, compared to gross profit of $115 million and gross margin of 40.5% in the prior-year period. Excluding Arkansas plant startup costs, adjusted gross profit was $133 million, compared to adjusted gross profit of $117 million in the prior-year period.<\/p>\n
\nGross margin performance reflected higher transportation-related input costs associated with increased diesel prices, as well as higher depreciation resulting from recent capacity investments. Startup costs at the Arkansas facility were higher than anticipated due to a temporary mechanical issue that created operational inefficiencies during the quarter. The issue has been resolved, and the Company expects startup-related costs to moderate as production volumes increase as the facility advances toward full utilization.<\/p>\n
\nSelling, general, and administrative expenses were $56 million, representing 15.7% of net sales, compared to $45 million, or 15.8% of net sales, in the prior-year period. Excluding digital transformation costs, SG&A was $55 million compared to $43 million in the prior year. The increase primarily reflects investments in people, capabilities, and brand-building initiatives designed to accelerate consumer demand and support future growth.<\/p>\n
\nNet income was $52 million, or $0.52 per diluted share, compared to net income of $52 million, or $0.48 per diluted share, in the prior year. Adjusted net income was $56 million, with adjusted diluted earnings per share of $0.55, compared to adjusted net income of $55 million, with adjusted diluted earnings per share of $0.51.<\/p>\n
\nAdjusted EBITDA increased 10% to $100 million from $90 million in the prior-year period.<\/p>\n
\nFree cash flow for the quarter was $135 million, reflecting strong operating performance, seasonal working capital benefits, and lower capital expenditures as construction of the Arkansas facility approaches completion.<\/p>\n
\nDuring the quarter, the Company repurchased approximately 1.2 million shares for $55 million and repaid $83 million outstanding under its revolving credit facility. The Company anticipates completing its Board-authorized $150 million share repurchase program by year-end, bringing total share repurchases during 2026 to approximately $300 million.<\/p>\n
Other Quarter Highlights<\/b><\/p>\n
- \n
- \nCelebrated Trex’s 30th anniversary and outlined a strategy to double the business over the next four years, expanding beyond category-leading decking to become the defining brand in outdoor living through continued investment in manufacturing capacity, product innovation, strategic partnerships, and digital solutions.<\/p>\n<\/li>\n
- \nAppointed Brian J. Taylor as the Company’s first Chief Commercial Officer (CCO), with responsibility for sales, marketing, and information technology. Bringing these functions together creates a more integrated, customer-focused approach to demand generation, channel engagement, digital capabilities, and revenue growth.<\/p>\n<\/li>\n
- \nAnnounced a strategic relationship with Do it Best Group. Through this relationship, Do it Best members and True Value retailers now have access to Trex products while also participating in the cooperative’s rebate program, strengthening the outdoor living category for members nationwide.<\/p>\n<\/li>\n
- \nExpanded its outdoor living portfolio with an upgraded Trex Lighting collection and new finishing solutions, including aluminum gates and marine-grade stainless-steel fastening options, providing homeowners and contractors with additional ways to create complete, coordinated outdoor living spaces.<\/p>\n<\/li>\n
- \nReleased its 2025 Sustainability Report<\/a>, highlighting the Company’s continued commitment to product quality, durability, environmental stewardship, and sustainable manufacturing practices.<\/p>\n<\/li>\n<\/ul>\n
Summary & Outlook<\/b><\/p>\n
\n\u201cWe are pleased to raise our full-year guidance, reflecting the strength of our year-to-date execution, continued demand for our products, and confidence in our strategic growth initiatives,\u201d said Prith Gandhi, Senior Vice President and CFO.<\/p>\n
\n\u201cWhile the broader market environment remains mixed, contractor engagement, consumer interest, and demand for Trex products continue to be strong. We believe our investments in distribution, manufacturing capacity, branding, innovation, and organizational capabilities are positioning Trex to continue gaining market share and creating long-term value for shareholders.<\/p>\n
\n\u201cWe also continue to generate significant free cash flow, supported by strong operational performance and declining capital expenditures as construction nears completion at Arkansas facility. Our capital allocation priorities remain focused on investing in growth, returning capital to shareholders through share repurchases, and pursuing strategic acquisitions,\u201d concluded Mr. Gandhi.<\/p>\n
\nThe Company is raising its full-year 2026 guidance, highlighted by increased revenue and adjusted EBITDA expectations.<\/p>\n
- Gross margin of 36.0% and adjusted gross margin of 36.9%<\/b><\/li>\n
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